Wheat Commentary


Wheat – Just My Opinion

March Chgo Wheat closed 14 ¾ cents lower ($5.36 ¼), May 17 ¼ cents lower ($5.34 ¾) & July 15 ¼ cents lower ($5.36 ¾)

March KC Wheat closed 16 ¼ cents lower ($4.52 ¼), May 16 ¼ cents lower ($4.59 ¼) & July 15 ¾ cents lower ($4.66 ½)

March Mpls Wheat closed 12 cents lower ($5.14), May 10 ½ cents lower ($5.27 ¾) & July 10 ¼ cents lower ($5.37 ¼)

Weekly Wheat Export Inspections – 411.5 K T. vs. 350-600 K T. expected

It’s called “risk-off” due to the continued spread of Covid-19 (aka the coronavirus). The fear is that if the virus continues to spread it will hit the global economy/global trade. Since this market is the only one within the Ag sector with spec net long positions it takes the biggest hit. Weekly export inspections were deemed as just okay; not enough to stem the slide. If the Covid-19 virus continues to spread it would not surprise me to see wheat futures in Chgo lose another 20 cents. Our competitors’ wheat markets continue to be soft looking. If they stay soft for sure US prices will stay soft as we are a secondary export market, just my opinion.

Advertised interior wheat basis levels show no change. Producer selling just isn’t there. The Gulf runs unchanged for HRW but appears to soften for SRW. 1st Notice day comes this Friday. Currently there are no registrations for Chgo and only 10 for KC. Granted this can change as we near Friday. If Chgo sees any deliveries it will be hard red or northern spring. The nearby March/May spread in Chgo was firm as the price action advertises no deliveries. May forward spreads were noticeably weaker. KC spreads continue to be mostly sideways but were weaker in response to the flat price selling.

Whether its Chgo whet or KC wheat – they both look rather ugly. I don’t think it would take much for Chgo wheat (May) to lose another 15-20 cents in rather short order. The KC charts don’t look quite as dire but there is room to move lower; at least another 10 cents. Inter-market spreading, the liquidation of the long Chgo/short KC spreads may offer some left-handed support.

Daily Support & Resistance – 2/25

May Chgo Wheat – $5.25 – $5.42

May KC Wheat – $4.50 – $4.66

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results.